Should You Plan on Working Past Age 65?

April 10, 2017

It’s no secret that many Americans struggle to save enough money for retirement. After all, retirement is a major financial goal. To reach your savings target, you’ll likely need to put money away on a regular basis for decades. Sometimes challenges arise in life and those challenges make it difficult to stay on track with your savings plan.

If you’re behind on your savings, you may be tempted to work past the age of 65. By working longer, you give yourself a few more years to contribute to your retirement accounts. You also eliminate a few years of retirement that you would’ve had to fund with distributions from your savings. And the decision to delay retirement may allow you to hold off on filing for Social Security, which could increase your benefit. Pushing back your retirement date may seem like the right solution to cover your savings gap.

In fact, according to a study from Transamerica, working past age 65 is a big part of many baby boomers’ retirement plans. The study found that two-thirds of baby boomers are planning to work past age 65; 15 percent say they plan on never retiring. Of those who plan on working past 65, two-thirds say their plans are due to financial reasons. They either haven’t saved enough, need the health coverage, or need the income.1

Unfortunately, even if you plan on delaying your retirement, the decision may not be up to you. A study from the Employee Benefit Research Institute found that 46 percent of retirees were forced to leave their career earlier than they had planned.2

The truth is that forced early retirement does happen, and it can have a significant impact on your financial stability. There are many reasons why you may not be able to delay retirement. Below are a few of the most common. If you haven’t created contingency plans for these challenges, you may find that the decision of when to retire isn’t yours to make.

Disability

As you get older, it’s reasonable to assume that you may become more vulnerable to health issues. In fact, health challenges are often a primary reason why workers leave their career earlier than they’d anticipated.

Many people mistakenly assume that disability is related only to unusual accidents or a complete loss of physical abilities. The reality is that a wide range of issues, from cancer to heart disease to back injuries, can leave you physically unable to work.

Many employers offer disability insurance. However, this type of insurance often provides benefits only for a limited amount of time. Social Security also provides disability benefits, although you may find that Social Security disability benefits are insufficient to meet your income needs.

If you haven’t yet done so, you may want to explore individual disability insurance. These policies allow you to pay premiums today, and then, if you become disabled in the future, you can receive benefits to replace your lost income. Some policies will pay benefits all the way to age 65, bridging the gap to retirement.

Job Loss

It’s also possible that you could be forced to retire early because of a layoff or some other form of restructuring. While that situation may not seem likely today, the business world can change quickly. No matter what business or industry you’re in, there’s always a risk that conditions could change and your job could be in danger.

It’s always wise to have an emergency reserve fund. As you approach retirement, though, you may want to build up that fund to cover your expenses should you lose your job before retirement age. Also, just because you’re nearing the end of your career doesn’t mean you should stop learning and improving your skills and abilities. Make yourself more valuable so that if your employer is considering layoffs, you will be less likely to lose your position.

Family Needs

Finally, you might want to consider the possibility that you may have to leave the working world to provide care for your spouse or some other loved one. The U.S. Department of Health and Human Services estimates that 70 percent of all retirees will need long-term care at some point.3

If your spouse developed an illness or injury that required extended care, would you be able to hire help so you could continue working? Or would you have to leave your job to provide the care yourself? You may have a parent at an advanced age who requires round-the-clock care. You may need to leave your job to provide care for that parent.

Do you have contingency plans for these challenges? If not, let’s talk about it. Contact us at Grand Canyon Planning Associates, LLC. We can help you analyze your risk exposure and develop a strategy. Let’s connect soon and start the conversation.

*Securities and Advisory Services offered through Client One Securities, LLC Member FINRA/SIPC and an investment advisor.
Grand Canyon Planning Associates, LLC and Client One Securities, LLC are not affiliated.